In the New York Times today, Luigi Zingales criticizes student loan programs for inflating tuition rates. Basically, he figures that whenever federal aid levels go up, universities raise their tuition rates and suck in all the extra money. Students themselves end up just as deeply in debt as they were before.

I suspect there's something to this for private universities. But I have my doubts about Zingales's favored solution:

Investors could finance students’ education with equity rather than debt. In exchange for their capital, the investors would receive a fraction of a student’s future income — or, even better, a fraction of the increase in her income that derives from college attendance. (This increase can be easily calculated as the difference between the actual income and the average income of high school graduates in the same area.)

This is not a modern form of indentured servitude, but a voluntary form of taxation, one that would make only the beneficiaries of a college education — not all taxpayers — pay for the costs of it.

The cost of enforcing contracts contingent on future income is very large, but there is an effective solution: piggybacking on the tax collection system. The Internal Revenue Service could perform collection services on behalf of private lenders, and at no cost to taxpayers. (In Australia, such a system has been in place since the 1980s. The national tax agency enforces repayment of loans contingent on income, though the payments of the wealthiest graduates are capped, and therefore less affluent graduates need to be charged more to make the program viable than in the system I am proposing.)

I wonder how the tax incidence of a program like this would differ from simply raising income tax rates on the wealthy a bit? Probably not that much, really, but you'd still have the problem of restraining tuition increases. As long as the government is making fixed amounts available to students, private universities have an incentive to take that money and then add on every cent the traffic will bear.

So what's the solution? I'm not sure, but I don't think that counting on "investors" would work. There might very well be plenty of investors willing to take a flyer on students at the top 40 or 50 most prestigious universities, but I doubt there'd be many takers below that level. Instead, if I were king for a day, I think I'd suggest this:

  • Public universities revert to their traditional function of providing good educations at very low cost. There's still a role for direct federal aid here, but it's a small one. For the most part, states would fund their own university systems and ensure that they're accessible to anyone who qualifies academically.
  • Private universities fund their own students, full stop. If you get accepted at Harvard, then it's up to Harvard to provide grants or loans that make it possible for you to attend. After you graduate, you're in hock to Harvard, not to a bank or the feds. If Harvard declines to provide adequate funding, then you don't go to Harvard.

Is this unfair? Sure. There are going to be some bright but poor (or middle-class) students who can't go to Harvard. Instead they'll have to go to UCLA or Rutgers. Is this a tragedy? I'm not so sure it is. It might even end up as an improvement as flagship state universities find themselves able to enroll more of the very best students. And why shouldn't they? The fact is that UCLA provides undergraduates with an education that's just as good as Harvard, and the country might be a better place if we all faced up to that and took Harvard and the rest of our super-elite universities off the pedestal we've placed them on. That pedestal has long since become corrosive and damaging to the public welfare.

Bottom line: The taxpayers don't owe you an education at Harvard. They don't owe you an education at whichever leafy liberal arts college stole your heart during a campus visit on your 17th birthday. They owe you a good education. Period. Maybe we'd be better off if we all understood this as well as we used to and rededicated ourselves to having the finest and most accessible public universities in the world.

POSTSCRIPT: This post should be taken mostly as a provocation, not as a carefully considered position. Persuade me that I'm wrong! I'm wide open to dissenting arguments here.

Ed Kilgore comments on Mitt Romney's latest fantasy for public consumption:

In a speech in Florida today, Mitt Romney repeated his frequent claim that in a post-ObamaCare world, he would fight to prevent insurance companies from denying coverage to people with pre-existing health conditions.

That's not just a lie, but a pretty big, pretty important lie.

I was going to excerpt the paragraph after that too, and then the next one, and the one after that as well. But that would have been pretty much the entire post. Instead, click the link and read it. Ed explains chapter and verse.

Bottom line: Mitt Romney has no intention of preventing insurance companies from denying coverage to people with preexisting conditions. His party wouldn't allow it, he doesn't really care about it, and it's basically impossible as a standalone policy anyway. He knows this. Everyone covering his campaign knows it. But the rules of engagement prevent anyone from plainly saying so. Ain't politics grand?

Andrew Sprung diagnoses American politics:

Over time, an increasingly extremist GOP has managed to induce a critical mass of voters to green-light its embodiment in law of two ideological tenets that are simple naked rationalizations of the narrowest interests of what we now call the 1%: 1) that tax increases always inhibit productive economic activity, and 2) that "free speech" entails prohibiting any restrictions on vested interests' access to the airwaves for any purpose whatever.

And the epic destruction of American unions over the past few decades has meant there was really no one to fight back against this. The victory of the 1% may have been spearheaded by the Republican Party, but it was aided and abetted by a Democratic Party that had no choice except to embrace corporations and the rich as its base of support as the labor movement faded away.

Now, I know what the usual objection to this is: It's too monocausal. There's more to life than economic interests, and people vote their values as well. But no matter how many times I hear that, I really don't buy it. There are plenty of people on the right and the left who care a lot about values and vote them pretty assiduously—me, for example—but in the vast middle ground values are more malleable. Views on abortion and gays and guns and religion tend to be less deeply held. For many of these folks in the middle, pocketbook issues would be decisive if they actually believed that one party was better for their pocketbook than the other. But increasingly they don't. Partly this is because of the GOP's messaging success and partly because the modern Democratic Party is, thanks to its reaction to the GOP's success, only modestly better for them anyway.

I've mentioned this before, but it was the financial collapse of 2008 that really cemented me in this view that the 1 percent have simply crushed their opposition over the past three decades. In any normal universe, that collapse should have ushered in an era of populist politics and ruined the Republican Party for years. Not for a generation, mind you—2008 wasn't 1929 and George W. Bush wasn't Herbert Hoover—but certainly for a good long time. After all, how clear could things be? We followed the precise path that Wall Street and the Republican Party laid down for us and the result was the biggest global economic crisis since the Great Depression. That sort of thing should keep you out of power for at least a few election cycles, no? But in fact, it kept them out of power for only one election cycle. That was it. The last few years have been a period of time in which the economy was overwhelmingly the most important electoral issue, and vast swaths of the American public simply haven't held the GOP or its policies responsible. They might tell pollsters they do, but in the voting booth, where it counts, they don't.

Republican economic policy has always promoted the interests of corporations and the rich. Once upon a time, this wasn't even an issue of contention. Everyone knew it and acted accordingly. The GOP's great triumph over the past three decades has been to gull the American public into believing that it's no longer the case. Their success has been nothing short of astonishing.

The Obama campaign has had a few missteps recently thanks to high-profile surrogates declining to join in on the Bain-bashing message that's central to Obama's message. So why does Obama persist in bashing Mitt Romney's years as a private equity manager at Bain? Why not choose some other line of attack? Because, says Ezra Klein, the Obama campaign has a fantastically sophisticated program for judging which messages resonate with voters, and what resonates with voters are attacks on Bain Capital. Unfortunately, Obama has more than just voters to contend with:

The problem that I don’t think the Obama campaign anticipated, or has even really known how to deal with, is that the message voters want is not the message political elites want. Top Democrats, who have friends and funders in the private-equity community, need to defend their allies. Pundits and reporters know people in these worlds, pride themselves on being above superficial populism, and so tend to bristle at ads featuring laid-off workers who blame Bain. And then there’s Wall Street itself, which is plugged into the media, has a lot of money, and thus can make its voice heard. That’s the thing about hitting the powerful. The powerful can hit back.

The good news for Obama, I think, is that Democratic Party elites will fall in line once they figure out that Bain bashing works. Sure, you'd just as soon not piss off your rich friends, but hey. Politics is politics. Nothing personal, you know? See you on the links in December.

What's more, contra Ezra, I think this stuff does matter. He's right that the state of the economy is by far the biggest factor in this year's election, and if the economy tanks too badly then nothing Obama does will matter. But there's no longer anything Obama can do about that. All he can do is hope that the economy will be just good enough to keep things close, and as long as things are close all he needs is to pick up two or three more points of support. If his Bain-bashing message gains him those points, it will indeed be almost nothing. Two points out of a hundred! That wouldn't even show up in the statistical noise of a poli-sci election model!

But it would also win the election for him. Statistically, it might be invisible. In the real world, it could be the difference between victory and defeat.

The EU bailout of Spain's banks is a mere four days old and investors have now completed the raspberry they gave it on its first day. Yields on Spanish bonds shot up not just past 6 percent, which happened within hours of markets opening on Monday, but have now touched 7 percent, closing today at 6.92 percent. Clearly, the end is near. But that's not all! Despite today's news, Germany says it's had enough:

The German chancellor warned that there were no "miracle solutions" to the eurozone crisis, even as the yields on benchmark Spanish 10-year bonds climbed above 7 per cent, a level seen as unsustainable by analysts.

…Underscoring how the European crisis is causing contagion in some of the continent’s largest economies, Italy’s borrowing costs jumped sharply at an auction of €4.5bn of bonds.

…German policymakers have argued that even Europe’s leading economy is not capable of assuming responsibility for the debts of all its partners. Instead they are seeking negotiations towards a “fiscal union” that would bind the members’ budgets closer together.

Remember that 11th-hour rescue I was talking about last week? Well, Europe's come-to-Jesus moment is now looking terrifyingly imminent. Hopefully, Angela Merkel's tough talk is aimed mainly at the Greeks, who hold another round of elections this weekend, and will soften up next week. If not, who knows? The clock is very definitely ticking away.

Climate Progress points us to some good news today. The latest Brookings poll on climate change shows that belief in global warming has continued to rebound from its recent lows. Acceptance of climate change still isn't as high as its post-Inconvenient Truth peak, but at least progress is being made. Broken down by party affiliation, both Democrats and Independents are stronger believers than in 2010, while Republicans remain mired at the same low levels as always.

But the rest of the news isn't so good. It would be nice to think that people are being swayed by the increasing torrent of scientific evidence about climate change, but it ain't so. As the table below shows, only 11% of respondents say that scientific research is the main reason for belief in climate change. The most popular reason by far is personal observations of weather and warmer temperatures. And in a followup question, 68% of respondents said recent mild winters have had a large effect on their views.

Conclusion: liberals need to stop nattering on about the latest research. It may gall us to do it, but anecdotal evidence (mild winters, big hurricanes, wildfires, etc.) is probably our best bet. We should milk it for everything it's worth.

JPMorgan Chase CEO Jamie Dimon testified before Congress today about his bank's gigantic trading losses a few weeks ago, and the gist of his testimony was — well, something or other. Basically, nobody laid a glove on him, and Republican senators in particular practically genuflected in his presence. No sir, nobody's thinking about regulating you any more than you already are! Wouldn't dream of it!

Or something like that. But the real news that has the chattering classes chattering was Dimon's fashion accessorizing. It seems that he was wearing presidential cufflinks, and nobody thinks this was just an offhand decision as he dashed out of his mansion this morning. But the question is, what message was he trying to send? There are several possibilities:

  • Don't fuck with me. The president has my back.
  • Give it up, GOP. I still support Obama no matter how much you suck up to me.
  • Hey Obama. See these? Don't take them for granted.

But maybe he meant something else entirely. We need to engage in some Dimonology here. Help me out.

President Obama is raising less money this year than he did in 2008. Quelle disaster! But wait: during the first half of 2008 Obama was in a tightly contested primary contest. This year he's running unopposed. So it's not very surprising that the pace of fundraising is a little less frenetic this time around

In any case, this is what a couple of political scientists told BuzzFeed's Rebecca Elliott when she called them to talk about Obama's money woes for an article she was working on. But apparently that didn't make a very good story, so their comments never made it into the final piece. Jonathan Bernstein wonders if public complaints about this kind of behavior will change the way reporters operate:

You know, lots of us (by which I mean both political scientists and anyone who has expertise and gets on reporters' dial lists) have had the experience of being interviewed as "experts", only to find that what a reporter really wanted was to find someone to say something the interviewer believed, but needed someone "objective" to say. That's a well-known phenomenon. What happens, however, when those experts choose to report on that interaction — and have an easy way to do so that the rest of their "expert" class will see? Or perhaps not that version, but the one where the reporter calling you doesn't seem to know the basics, or the one where, as in the example above, the reporter ignores everything you said and writes the same story she intended to write.

And not only that (after all, email lists uniting expert communities go back more than 20 years), but the combination of twitter plus blogs is something that the expert community use that the reporters interested in those experts can see, too. In other words, there's now a risk that if you consult experts, you'll wind up getting a blast of negative publicity both in that expert community and among your peers in the press.

I'm actually surprised this doesn't happen more often. After all, as Jonathan points out, the existence of blogs and Facebook and Twitter and listservs makes it pretty easy for interviewees to chat about their interactions with the press. But it doesn't actually happen all that often. I can think of several possible reasons for this:

  • The vast majority of interactions with reporters are pretty boring and not worth writing about.
  • Writing about a reporter interviewing you might sound a little conceited ("Look Ma, I'm being interviewed!").
  • Or it might make you sound like a rube. Sophisticates take this stuff in stride.
  • Or it might make you sound like a bellyacher.
  • Maybe most reporters do a good job and there's not really much cause for complaints in the first place.
  • Sources don't want to risk not getting calls in the future, and dishing on reporters might get you blacklisted.

What else? Is this kind of thing likely to increase? If it does, will it make much difference? Or will it just become the new normal and nobody will really care?

Sarah Kliff reports on a new study of presidential pets:

Crunching the numbers, the article finds that White House dogs could be playing a diversionary role: They tend to get trotted out during times of international conflict and presidential scandal (no similar effect, it’s worth noting, was found for cats).

Of course not. No self-respecting cat would allow itself to be used as a prop for a scandal-ridden president. The very idea is laughable.

From Joe Klein this morning:

A break from the road trip for one small quibble with Charles Krauthammer: he has now completely abandoned any intellectual integrity he may have had and joined the cult of Reagan mythmaking....Krauthammer used to be an independent thinker, too. Tis a pity he’s a hack, and a smug, reflexive one at that.

That's a small quibble? What would qualify as a big one?